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The St Louis Contrarian

Providing Independent and Intelligent Insight on St. Louis Public Policy Issues

Archive for the category “workforce housing”

Statistics on Lack of Housing Affordability

Everyone knows there is a serious lack of affordable housing in this country. This gap contributes to homelessness, poor school performance, childhood trauma, and mental and physical health problems. The National Low Income Housing Coalition (NLIHC) presents a report every year which documents the housing affordability problems. They compare the minimum wage income to rents and then deduce the level of housing non affordability. They compare the monthly minimum wage income to the median rent in the area and calculate that anyone paying more than 30% of their income for rent is paying too much for housing.

Like I said, I am a big affordable housing advocate and understand the lack of affordable housing. I disagree with the methodology used in this study. Many minimum wage workers are students or retirees and do not expect to live on this income. Others double up with roommates to meet housing costs. Third most minimum wage workers do not stay at that salary level for long. I believe the average tenure at minimum wage is six months. For better or worse, minimum wage was never intended to be a living wage.

A more valid comparison would be between median salary and median rent. This statistic would still tell and alarming story, but the data would be more truthful. I have the highest respect for the National Low Income Housing Coalition. They do great work.

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Mortgage Interest Deduction

The mortgage interest deduction on federal income tax is by far the biggest housing subsidy available. It far surpasses Section 8, LIHTC, or other forms of subsidy. The major problem with this subsidy is because it primarily benefits higher income households. That is because a tax deduction only benefits households who itemize and those with a more substantial tax burden. Most of the benefit of this deduction goes to households earning over $200,000 a year. This program hurts central cities more than suburbs for the following reasons:

1. As stated before, less expensive houses provide less of a deduction to affluent purchasers. The present system actually provides incentives for middle and upper middle income households to buy more expensive homes which are generally located in suburbs.

2. Renters who are more common in the central city receive not subsidy at all.

The National Low Income Housing Coalition has a United for Homes campaign which attempts to rectify the housing tax deduction issue. The policy they advocated would limit deductions to $500000 of interest, and provide a 15% tax credit to households which would much more adequately address the needs of lower income homeowners. The billions in cost savings would be used to subsidize new affordable housing. Check out the website Unitedforhomes.org

Urban Homesteading

I wanted to write again about Urban Homesteading, a program which I believe would be transformative for St. Louis and other communities. My previous work with this program in Milwaukee inspires my vision.

St. Louis has lots of vacant boarded houses in city possession. Urban Homesteading would allow for the transfer of these houses to individuals and families who agree to live in the houses and rehabilitate them to code. Title would transfer to the homesteader after successful completion of the rehabilitation. Some important caveats:

1. The rehab would need to be completed by professional contractors approved by the city. Sweat equity does not work in these situations.

2. The families selected for the program must be working and pass a screening. This will not work for people with significant social problems.

3. The properties must be carefully selected. They should be as close together as possible, and in a condition that allows for rehab.

St. Louis is working hard to attract young people to the city. This program can significantly help that effort.

Workforce Housing

I have done extensive work through the years on Workforce Housing, which is loosely defined as housing that is affordable for average working people. Barriers to this sort of housing are similar but a little bit more subtle than barriers to affordable housing. What I am talking about here is single family or attached units that are fairly small, 1200-1500 square feet, on a small lot.

The key barriers involve issues such as:

1. Zoning- Many times zoning laws do not allow multiple uses within a given area thereby requiring large lots and only single family homes to be constructed.

2. Land use- Again issues such as width of streets, sidewalks, and lot sizes drive up costs significantly.

3. Excessive levels of hearings and paperwork- Many times the permitting process is cumbersome and redundant. St. Charles County requires duplicate inspections by building inspectors and the fire department. All this costs money, adding to the cost of a home.

4. Historic preservation- This is largely a problem in the City of St. Louis. In that city virtually everything is considered historic. Rehab or construction of houses in these areas required intricate design and levels of approval. Costs increase significantly for historically compatible structures. Often, the house itself is not significant but is located in a historic neighborhood.

5. Resistance to manufactured housing- Factory build manufactured housing is much cheaper to construct, is safer, and more energy efficient. Many communities still do not allow for this type of housing.

6. Resistance from neighbors- People who own larger homes are resistant to communities of smaller ones. Consequently we get zoning and land use requirements that require minimum lot and house sizes, thereby driving up costs. Research shows that quality built smaller homes actually add to the value of their more expensive counterparts.

These issues can all be addressed through government and community leadership and common sense and do not require funding. Conservatives and liberals alike should be happy to address these issues. Inclusionary zoning could be one tool to address this but it has proved too politically charged to work in most communities.

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